Gilmore, Inc., had equity of $160,000 at the beginning of the year. At the end of the year, the company had total assets of $315,000. During the year, the company sold no new equity. Net income for the year was $34,000 and dividends were $4,400. What is the sustainable growth rate for the company? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What is the sustainable growth rate if you use the formula ROE x b and beginning of period equity? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) What is the sustainable growth rate if you use end of period equity in this formula? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a. C. Answer is complete but not entirely correct. 12.46 8 % Sustainable growth rate ROE x b (using beginning of period equity) ROE x b (using end of period equity) a. b. 18.50 9.40 8 % C.
Gilmore, Inc., had equity of $160,000 at the beginning of the year. At the end of the year, the company had total assets of $315,000. During the year, the company sold no new equity. Net income for the year was $34,000 and dividends were $4,400. What is the sustainable growth rate for the company? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What is the sustainable growth rate if you use the formula ROE x b and beginning of period equity? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) What is the sustainable growth rate if you use end of period equity in this formula? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a. C. Answer is complete but not entirely correct. 12.46 8 % Sustainable growth rate ROE x b (using beginning of period equity) ROE x b (using end of period equity) a. b. 18.50 9.40 8 % C.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Gilmore, Inc., had equity of $160,000 at the beginning of the year. At the end of the year,
the company had total assets of $315,000. During the year, the company sold no new
equity. Net income for the year was $34,000 and dividends were $4,400.
What is the sustainable growth rate for the company? (Do not round intermediate
calculations and enter your answer as a percent rounded to 2 decimal places,
e.g., 32.16.)
b. What is the sustainable growth rate if you use the formula ROE x b and beginning of
period equity? (Do not round intermediate calculations and enter your answer as
a percent rounded to 2 decimal places, e.g., 32.16.)
What is the sustainable growth rate if you use end of period equity in this formula?
(Do not round intermediate calculations and enter your answer as a percent
rounded to 2 decimal places, e.g., 32.16.)
a.
C.
Answer is complete but not entirely correct.
12.46 8 %
Sustainable growth rate
ROE x b (using beginning of period equity)
ROE x b (using end of period equity)
a.
b.
18.50
9.40 8 %
C.
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